Buying a home is a BIG deal, and it’s scary, with all the money at stake, so today I’ll be addressing 9 AVOIDABLE mistakes that homebuyers make time and time again. It’s important to note that these 9 avoidable mistakes are NOT listed in any particular order, but be sure to stick around for the last one, because it may be the most heartbreaking of them all.

1. Assuming that you need a 20% down payment

The first avoidable mistake is assuming that you NEED a 20% down payment, but that’s simply not always the case. Financing with 3% or 3 ½ percent down, or even no money down is quite common these days. Plus, there are all sorts of down payment assistance programs out there, some of which could potentially get you into a new home for just a few thousand bucks. And I’m not just talking about VA financing here either. Check with a local Realtor® for some reputable lenders and see what programs might be available to you.

Call them and compare them. There are numerous programs that can help with your down payment. Be careful though, sometimes these tools that help homebuyers get into homes can be expensive, so be sure to ask your lender about the costs and any other downsides that may be associated with these tools.

2. Assuming you cannot buy because interest rates are too high

When interest rates are high, many often assume that they can’t, or should not buy because of the high interest rates. Look, high interest rates can surely create budgeting problems, but a good Realtor® might be able to help negotiate a lower interest rate during the purchase of a home. Although an interest rate buydown may only help for a couple years, the way interest rates go up and down, it could be a good way to get you into a home sooner than later, which could be a huge deal given the way home prices seem to keep rising and rising.

Another issue here is that when homebuyers wait to purchase, they often fail to realize the COST of waiting. Additional years of rent, or living in your mom’s basement are one issue, but another issue is that real estate prices historically increase at about 4% each year as an average. So, if you hold off just two years waiting for rates to fall and pay 8% more on a home, you may be costing yourself a lot of dough, especially when you consider that refinancing is often an option when rates do fall.

3. Failing to talk to a lender BEFORE you start looking for homes

The next one is failing to talk to a lender BEFORE you start looking for homes. Searching for homes is an emotional process, and it’s an easy process to get started on. Simply open your laptop or just pick up your phone and start looking, but sometimes what’s easy isn’t always what’s good. However, the reality is that searching for homes should start with determining how much home you can afford.

So, before you start looking at homes you dream about moving into, connect with a few lenders, and get preapproved so that you know how much home you can afford. I’ve seen broken hearts when a homebuyer has champagne taste and a beer budget. Protect yourself here and speak to a lender BEFORE you do all that daydreaming of moving into your dream home.

Many of these avoidable mistakes deal with failure, but my goal here to help you SUCCEED in the home buying process, so if you’re thinking of buying a home, let us help.

4. Assuming you understand the process because you bought a home before

Don’t assume that you understand the homebuying process simply because you bought a home in the past. The homebuying process changes significantly over time and even more so from state to state, so if you bought a home, say ten years ago in Illinois, don’t assume the process will be the same for a home purchase in Florida today. The entire process can be VERY different, and failing to recognize this can create all sorts of headaches during the homebuying process.

5. Failure to check your credit report BEFORE beginning the process

Check your credit report BEFORE beginning the homebuying process. So many of us have skeletons in our credit closet that we aren’t even aware of. Maybe that store credit card that saved you 15% on a purchase 3 years ago never got paid, or maybe there was an auto payment that wasn’t properly recorded. Maybe there’s a clerical error for a charge that isn’t even yours!

Things happen, and they might be easily corrected if you simply take a look. Go online, one website you can easily check your credit score is annualcreditreport.com. You’re going to need to deal with these issues sooner or later. Failing to deal with them BEFORE getting into the homebuying process is one avoidable mistake I see all too often, causing serious delays for homebuyers.

While we’re on the topic of credit. Throughout the process of buying a home, avoid making any significant purchases whatsoever. That means no new furniture, fancy appliances, and definitely avoid that brand-new Corvette! Any major purchase can completely derail the purchase of a home.

6. Buying more home that you can afford

Buying more home that you can afford is a HUGE mistake. Lenders will pre-qualify or pre-approve you for a given dollar amount for a home, but it’s important to remember that this number is usually the MAXIMUM number that they’ll give you. That does NOT mean that’s the amount you can afford. Only YOU can determine how much home you can afford.

When the bills start coming in and there’s more month left than money, that lender is going to be long gone, and you’ll be left with some difficult choices. So be honest with yourself here and don’t buy more home that you can afford.

7. Using the wrong Realtor® (or not using one at all)

You may think I’m biased here, but as a Realtor® for many years, I’m well aware of the consequences of using the wrong Realtor®, or of not using one to advocate for you when buying a home. A Realtor® is the one who guides you through the homebuying process. They should be providing good advice for selecting a home, negotiating, and managing the process from the home showing, to inspections, and on through the closing.

A good Realtor® can surely save you endless headaches and tens of thousands of dollars, easily outweighing the potential expense of their services. But of course, a bad Realtor® can COST you that money, in addition, they can create all sorts of problems. So, why not just go to the Listing Agent of the home that I’m interested in? Won’t that save me that money?

Well, it’s not that simple. While it’s true you might not have to pay that money, the seller may already be offering compensation for a Realtor® to bring them buyers and meet your needs to buy their home. In addition, who do you think that Listing Agent is working for?

I mean, they’ll be happy to do it, because they’ll just put the money set aside for the Buyer’s Agent in their pockets.  But do you think they’re doing to negotiate for YOUR best interest? Well…they COULD, but I wouldn’t bank on that.

Finding a GOOD Realtor® takes time, so do your research. Get online and locate a few Realtors that have experience, like, a LOT of experience. When you’re checking them out, look for more than just a cool Facebook page and a fancy bio. Some of the bigger real estate websites will show a Realtor’s sales, so check to ensure there are plenty of sales, and sales in the area that YOU want to buy in.

Before we get to what I consider two of the most avoidable mistakes, I’ve been a local Realtor® for many years here in Central Florida, but I’ve got numerous connections across the country, so if you’ve got real estate needs anywhere at all, simply pick up the phone and give me a call.

8. Waiting to start saving for a home

You might be able to buy a home with low money down, and that is important; however, it’s also important to note that the more money you have when you start the process, the better off you may be. Some of these first-time homebuyer programs and down payment assistance programs are great, but they can also be very expensive.

Lenders like to be sure they’re going to get their money back, so the more secure they are in this, the less expensive that money may be to you. So every dollar you save, could save you hundreds of dollars over the life of the loan in addition to allowing you the option to simply purchase a nicer home. Having a higher down payment could get you a lower interest rate and avoid the need for down payment assistance programs.

9. Failure to understand the many expenses of the home buying process

One of the worst, most avoidable mistakes that I see homebuyers make is to failure to understand the many expenses that occur during the home buying process. While it’s true that many of the expenses of the home buying process are wrapped up in the mortgage, there are many that are not.

For instance, a home inspection may run you $500 to $1,000. A survey for a small lot could get you for another $600. There are all sorts of fees to set up utilities like electric, water, and internet. There are all sorts of inspections that your Realtor® may encourage you to have done in an effort to protect you and your money.

So, early in the process, speak with your Realtor® about what expenses you should anticipate incurring as you embark on this expensive process. Failure to recognize the costs BEFORE they occur might be the greatest of all the failures I’ve spoken of today. Thanks for watching, and I’ll see ya’ soon!

 

Published on August 26. 2024 / no comments.